Having watched this game I think unfortunatley that Smalley got both decisions wrong, the first due to the TMO.
If you look at the angle that Varndell tackles and his position on the pitch, he procedes to drive at about 45 degrees in my eyes towards the sidelines and from when he makes the initial hit, he straightens his body which forces the Bath winger up and backwards, and yes he does end up with his hips higher however he lands under control on his back, shoulders and is not driven or dropped into the ground.
With regards the Day YC, contact in the air (YES) then lets go, until player touches ground then hauls him down, so if anything nothing more than a penalty for me, however Smalley forces himself to YC Day with the words,(sic) "i have to be consistent with the earlier call and card and you have to go". (Not the correct explanation, but all i can remember from Sunday's game).